Confused about what your insurance actually covers? Call Schell Insurance at (972) 423-4546 and we’ll straighten it out.
Look, we’ve been doing this since 1930. That’s a long time to listen to people’s insurance questions. And boy, do we hear some doozies.
“Wait, floods aren’t covered?”
“You mean my credit score affects my car insurance?”
“Red cars really don’t cost more?”
Every week, someone walks into our office completely shocked about something they thought they knew about insurance. Usually something they heard from their brother-in-law or read on Facebook.
Time to clear up the biggest insurance myths we hear around North Texas.
The Flood Thing Everyone Gets Wrong
Biggest myth ever: “My house insurance covers floods.”
No. It doesn’t. Never has.
Water from burst pipes? Covered. Roof leak during a storm? Covered. Your neighbor’s sprinkler system going haywire and flooding your garage? Probably covered.
But actual flooding? Like when Rowlett Creek decides to visit your living room? Not covered at all.
Flood insurance is separate. You get it through FEMA or some private companies now. Takes 30 days to kick in after you buy it, so don’t wait until you see storm clouds.
“But I don’t live near water!” Yeah, we hear that a lot. Then the city storm drains back up during a heavy rain and suddenly your kitchen is underwater.
Happened to a nice lady in Richardson couple years back. Lived there 20 years, never had water problems. One crazy thunderstorm and the storm drain couldn’t handle it. First floor was ruined.
She kept saying “But I’m not in a flood zone!” Like that mattered to the water in her house.
Credit Scores and Car Insurance
This one surprises everybody.
Your credit score affects your car insurance rates in Texas. Better credit, lower rates. Terrible credit, higher rates.
“That’s ridiculous! I always pay my insurance on time!”
Doesn’t matter. Insurance companies figured out that people with good credit file fewer claims. Don’t ask me why – I just sell the stuff.
What hurts your insurance credit? Same stuff that hurts regular credit. Late payments, maxed out credit cards, too many new accounts.
Good news is you can fix it. Pay bills on time, keep credit card balances low, don’t open new credit accounts unless you really need them.
Takes time though. Credit doesn’t fix overnight.
Red Cars and Other Nonsense
“Red cars cost more to insure.”
Where did this come from? We’ve been hearing it for decades and it’s never been true.
Insurance companies don’t care what color your car is. They care about make, model, year, safety features, how often it gets stolen.
A red Honda Civic costs exactly the same to insure as a blue Honda Civic.
Sports cars cost more than minivans. Expensive cars cost more than cheap cars. Cars that disappear from parking lots a lot cost more than cars thieves ignore.
But color? Never mattered, never will matter.
Same goes for “sports cars are always expensive to insure.” Depends on the car. A Corvette? Yeah, that’s gonna cost you. A Miata? Not so much.
The Claims Game
“If I don’t file claims, my rates will go down.”
Sort of true, but not really.
Yeah, filing a bunch of claims can raise your rates. And some companies give discounts for being claims-free.
But insurance rates go up and down for all kinds of reasons. Inflation, bad weather years, company profits, new state regulations.
Your personal claims history is just one piece of it.
And here’s the thing – you pay for insurance to use it. Don’t file legitimate claims because you’re worried about rate increases. That’s like buying a hammer and never using it because you don’t want to wear it out.
State Minimum Car Insurance
“The state says I need $30,000 coverage, so that’s enough.”
Ha. Good luck with that.
Texas minimums are $30,000 per person for injuries, $60,000 per accident, $25,000 for property damage.
That might’ve been decent money when Jimmy Carter was president. Now? One trip to the emergency room can blow through $30,000.
And cars? Even basic cars cost $25,000 now. You rear-end a nice truck and you’re already over your property damage limit.
Smart people carry at least $100,000/$300,000/$100,000. Smarter people go higher.
Doesn’t cost that much more and saves you from financial disaster if something bad happens.
Life Insurance Confusion
“I’m single, I don’t need life insurance.”
Maybe, maybe not.
Got student loans? They don’t disappear when you die. Someone’s gotta pay them – usually your parents.
Got a business? Life insurance can help your business partner buy out your share.
Want to leave something to your favorite charity? Life insurance is usually the cheapest way to do it.
And here’s another one: “I get life insurance at work, that’s plenty.”
Work life insurance is usually one or two times your salary. If you make $50,000, you might get $100,000 in coverage.
That’s not much if you’ve got a family depending on your income. Plus it goes away when you change jobs.
Work coverage is better than nothing, but it’s not the whole answer.
Homeowners Confusion
“My homeowners policy covers my Etsy business.”
Nope.
Selling crafts online? Tutoring kids? Consulting from your home office? None of that business stuff is covered by regular homeowners insurance.
“But I only make a few hundred dollars a month!”
Doesn’t matter. Someone trips over your computer cable during a business meeting and you could get sued for thousands.
Business insurance for small home operations isn’t expensive. But you definitely need it.
Another big one: “I need enough insurance to pay off my mortgage.”
Wrong goal. You need enough to rebuild your house.
Your mortgage might be $200,000 left. But rebuilding your house with today’s construction costs? Could easily be $300,000 or more.
Your lender cares about protecting their loan. You should care about having a place to live.
Deductible Mistakes
“Higher deductibles save money.”
True, but only if you can actually afford to pay the deductible.
Saving $300 a year with a $5,000 deductible is dumb if you don’t have $5,000 in the bank.
Pick a deductible that won’t stress you out if you have to pay it. Then enjoy whatever premium savings you get.
Oh, and here’s one people get confused about: You don’t pay your deductible to the insurance company. You pay it to whoever fixes your stuff.
Insurance company pays the contractor $9,000, you pay $1,000, total repair bill is $10,000 with your $1,000 deductible.
Umbrella Insurance Myths
“Umbrella insurance is for rich people.”
Rich is relative. If you own a house and have some savings, you’re richer than you think.
Umbrella coverage is cheap. Maybe $200-300 a year for an extra million in liability coverage.
Lawsuits don’t care if you feel middle-class. They care about what you’ve got to lose.
Car Insurance Confusion
“Full coverage means everything’s covered.”
“Full coverage” doesn’t actually mean anything specific. Usually people mean liability, collision, and comprehensive when they say that.
But there are different limits, different deductibles, different add-ons. Know what you actually have.
And this one: “If someone without insurance hits me, I’m screwed.”
Not if you have uninsured motorist coverage. About one in five Texas drivers doesn’t have insurance. Your uninsured motorist coverage pays when they hit you.
Renters Insurance Myths
“My landlord’s insurance covers my stuff.”
Your landlord’s insurance covers the building. Your couch, TV, clothes? That’s on you.
Renters insurance costs maybe $20 a month and covers all your belongings plus liability if someone gets hurt in your apartment.
“I don’t have enough stuff to bother.”
Add up everything you own. Furniture, clothes, electronics, kitchen stuff, everything. Most people have $20,000-30,000 worth of belongings without thinking about it.
Why This Stuff Never Dies
Insurance is confusing. Policies are written by lawyers for lawyers. Most people never read them.
So they guess. Or they ask their neighbor. Or they remember something they heard somewhere.
And wrong information spreads faster than right information because it’s usually simpler and more dramatic.
Social media makes it worse. “Insurance companies don’t want you to know this one weird trick!”
Yeah, right.
What We’ve Learned
90 years in this business teaches you things.
People want simple answers. Insurance isn’t simple, but we can explain it without using lawyer language.
Most problems come from misunderstandings, not bad policies. Clear explanations prevent most headaches.
Cheap isn’t always good. The cheapest policy might leave you hanging when you need it most.
Relationships matter. When your roof gets destroyed by hail, you want to call someone who knows you, not some 1-800 number.
Getting Real Answers
Stop guessing about your insurance. Stop believing everything you hear.
Read your policies – at least the important parts. Ask questions when something doesn’t make sense.
Get information from people who actually know what they’re talking about, not from Facebook posts or random websites.
Insurance is too important to wing it.
Tired of insurance myths and bad information? Want to know what your policies actually do? Call Schell Insurance at (972) 423-4546. We’ve been separating insurance fact from fiction for over 90 years. Let’s go through your coverage and make sure you know exactly what you have. No sales pressure, no confusing language, just straight answers.